MINING INDABA 2015: Glencore doubles iron ore trade in 2014

Swiss commodity giant Glencore doubled its traded volumes of iron ore in 2014 to 60 million tonnes, making it one of the largest traders of the raw material in the world, sources told Steel First on Thursday February 12.

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The company’s growth in the market has been rapid, with Glencore trading 33.2 million tonnes of iron ore in 2013, up from 10.3 million tonnes of iron ore in 2012.

“Glencore is big. This year, I think the impact of large traders on the market will become bigger and bigger as more of the small ones continue to leave the market,” a Shanghai-based trader said.

“[Glencore] traded more than 50 million tonnes in 2014. We bought more than 3 million tonnes of iron ore from Glencore last year,” a source at a steel mill in China’s Hebei province told Steel First.

A Glencore spokesman declined to comment.

The company is due to publish official selected traded volume figures in its 2014 annual report in March.

Slumping prices
Glencore’s ramp up in iron ore trading activities comes amid a change of leadership in its iron ore team and sharp decline in the price of seaborne iron ore.

A huge influx of new iron ore supply hitting the market and a slowdown in Chinese demand growth saw seaborne iron ore prices halve in 2014, dropping from more than $130 per tonne at the beginning of the year to $65 per tonne in December.

Prices have since declined further, with Metal Bulletin’s 62% Fe iron ore index falling to $62.18 per tonne on February 11.

Glencore’s head of iron ore, Christian Wolfensberger, left the company last year and Jyothish George now heads up the team alongside traders including Alex Pouget and Peter Hill.

Glencore’s increasing prominence in the traded seaborne iron ore market comes despite a number of its smaller offtake partners going bankrupt or placing mines on care and maintenance.

Offtake deals with Sierra Leone iron ore producers London Mining and African Minerals were cancelled or put on hold last year.

London Mining’s bankruptcy in October saw all offtake deals with the miner cancelled including a 9.7 million tonne five-year deal inked with Glencore in 2012.

Cashflow issues caused by the slump in iron ore prices saw African Minerals place its Tonkolili iron ore mine on care and maintenance in December, halting shipments from the project.

The shifting dynamic of the iron ore market in the past 12-18 months has seen the rostrum of the world’s top traders of the raw material shift.

Sources told Steel First that Cargill, the world’s largest privately owned commodity trading company, has reduced its position in the market in recent months, trading just 30 million tonnes of iron ore in 2014.

The world’s largest iron ore traders include Hong Kong-based RGL, which traded an estimated 100 million tonnes of iron ore in 2014 and Chinese state-owned trading major CNBM, which is understood to have traded around 60 million tonnes of the material in the past year.

Unlike many of its competitors, Glencore does not operate any producing iron ore mines.

The trading house made a bid for Rio Tinto last year, largely on the strength of the Anglo Australian mining major’s iron ore business. The bid was rejected.

Sources close to Glencore said that despite the downturn, the commodity major is still on the hunt for good quality iron ore assets at the right price.

Rena Gu in Shanghai and Shu Zhu in Singapore contributed to this article.

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